Analysis & Opinion

April 24 (Reuters) - Lower wholesale power prices in the
U.S. Midwest and Mid-Atlantic regions have reduced the amount of
money available to nuclear power generators, the U.S. Energy
Information Administration (EIA) said in a report Wednesday.

Since 2012, EIA said quark spreads, which measure the
potential profitability of nuclear power plants, in the Midwest
and Mid-Atlantic have ranged from about $10 to $35 per
megawatt-hour (MWh).

Quark spreads in 2008 ranged from $20 to $90 per MWh.

A quark spread is the difference between the wholesale
electricity price received by a nuclear plant and the cost of
fuel needed to generate the electricity.

EIA said the quark spreads were down primarily due to weaker
natural gas prices. In many parts of the United States, natural
gas fired plants set the price of power paid to all generators.

Natural gas and power prices in 2012 reached decade lows in
part due to record shale production.

EIA said the estimated average national fuel costs in 2011
for coal and natural gas plants were $25/MWh and $36/MWh,
respectively. Nuclear fuel however costs averaged only $6/MWh.

EIA said The recent narrowing of quark spreads may affect
investment decisions for plants that anticipate major capital
expenditures or increasing operating and maintenance costs in
the near future.

Nuclear plants owned by vertically integrated utilities
under cost-based state regulation may be in a better position to
recover increases in plant expenses by passing them through
directly to ratepayers, EIA said.

But EIA warned that merchant nuclear plants are more
directly reliant on the wholesale electricity market for the
revenue necessary to recover these costs.

Already U.S. power company Dominion Resources Inc said
it would shut its Kewaunee nuclear plant in Wisconsin later this
spring, 20 years before its operating license expires, due in
part to weak market conditions. Kewaunee is a merchant nuclear
plant.

Other operators of merchant nuclear power plants include
Exelon Corp, Entergy Corp, NextEra Energy Inc
and Public Service Enterprise Group Inc.